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Does the IRS have the authority to impose a 6694(b) if the preparer furnished documents but did not attend the hearing?

Fort Washington, MD |
Filed under: Tax return Tax law

A tax preparer is being targeted for a preparer penalty examination. The IRS initial correspondence with him was vague but they Googled the letter number and found it was for a Preparer Penalty Examination. The IRS asked him to bring all things related to 09&10 from returns to correspondence. §6107 states the preparer only has to keep the documentation for 3 years. The preparer raised this issue and the examiner stated he should keep documents "indefinitely" just in case. The examiner told the preparer in so many words the penalty had already been determined. The preparer smelled a rat, sent in the disclosures for 09&10, cited 6107, but wont go into the meeting. Does the IRS has legal authority in the IRC to impose Preparer Penalties because he didnt attend the ambush?

Attorney Answers 2


Short answer is Yes. Avoidance is rarely an effective strategy with the IRS. Now would probably be a very good time to get a tax attorney working for you and also keep in mind that whatever you post on this site is not confidential, so it might be a wise move to take the matter offline and pursue it directly with your tax counsel.

Good luck.

Evan A. Nielsen is licensed to practice law in California and handles federal tax matters throughout the U.S. The information provided here is for educational purposes only and is not intended as legal advice for a particular matter. This response does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult an attorney.

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As of late, the IRS has been very aggressive in enforcing the paperwork maintenance requirements of tax return preparers. I represented a tax return preparer against whom the IRS asserted preparer penalties because she did not keep "paper" records verifying that her clients were entitled to claim certain individuals as dependents on their tax returns and to substantiate earned income credits. The preparer instead maintained much of the required information on her computer, in the form of responses to client questionnaires. I argued that in this Digital Age, there is no reason why a preparer should be required to maintain paper records of required information -- to no avail.

The IRS does not have authority to impose penalties against a preparer merely because he fails to attend an examination; it needs to have a sufficient factual basis for imposition of the penalties. That having been said, the preparer's non-attendance at an examination will not help his cause and may be construed by the examiner as evasive conduct. Based upon what you have stated, however, it sounds like the proposed assessment of preparer penalties against your client is a foregone conclusion because the examiner has made up his mind. Thus, the preparer's attendance at the examination may simply be "kabuki theater." Under the circumstances, your client's best bet may be to file a protest of the proposed penalties with the IRS Appeals Office and hope that he obtains a more impartial, reasonable decision-maker at the "next level." Best of luck to you and your client!

The answer to this question does not establish an attorney-client relationship. Moreover, this attorney is licensed to practiced law ONLY in the State of California. Answers to questions from users in other jurisdictions or states are meant to provide only general information. Users should contact a local attorney in their jurisdiction or state to address their specific tax issue.

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§6107. Tax return preparer must furnish copy of return to taxpayer and must retain a copy or list (a) Furnishing copy to taxpayer Any person who is a tax return preparer with respect to any return or claim for refund shall furnish a completed copy of such return or claim to the taxpayer not later than the time such return or claim is presented for such taxpayer's signature. (b) Copy or list to be retained by tax return preparer Any person who is a tax return preparer with respect to a return or claim for refund shall, for the period ending 3 years after the close of the return period— (1) retain a completed copy of such return or claim, or retain, on a list, the name and taxpayer identification number of the taxpayer for whom such return or claim was prepared, and (2) make such copy or list available for inspection upon request by the Secretary. The examiner is trying to circumvent the law which clearly states a tax preparer only has to keep a copy of the return or the taxpayers name and identification number for 3 years

Richard Gordon Stack

Richard Gordon Stack


If the examiner is asserting that he can request the preparer produce tax records more than 3 filing seasons old, then I would read him the Treasury Regulation cited in one of my earlier comments which references that time limit. If that still doesn't sway the examiner, then I would ask to speak with his manager.

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